Correlation Between Pfizer and 278642AU7

Can any of the company-specific risk be diversified away by investing in both Pfizer and 278642AU7 at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pfizer and 278642AU7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pfizer Inc and EBAY INC 36, you can compare the effects of market volatilities on Pfizer and 278642AU7 and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pfizer with a short position of 278642AU7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and 278642AU7.

Diversification Opportunities for Pfizer and 278642AU7

0.7

Correlation Coefficient

Pfizer  278642AU7

Poor diversification

The 3 months correlation between Pfizer and 278642AU7 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and EBAY INC 36 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBAY INC 36 and Pfizer is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pfizer Inc are associated (or correlated) with 278642AU7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBAY INC 36 has no effect on the direction of Pfizer i.e., Pfizer and 278642AU7 go up and down completely randomly.

Pair Corralation between Pfizer and 278642AU7

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the 278642AU7. In addition to that, Pfizer is 3.16 times more volatile than EBAY INC 36. It trades about -0.14 of its total potential returns per unit of risk. EBAY INC 36 is currently generating about -0.19 per unit of volatility. If you would invest  9,900  in EBAY INC 36 on September 13, 2024 and sell it today you would lose (513.00) from holding EBAY INC 36 or give up 5.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Pfizer Inc  vs.  EBAY INC 36

Pfizer Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

EBAY INC 36

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EBAY INC 36 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 278642AU7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pfizer and 278642AU7

The main advantage of trading using opposite Pfizer and 278642AU7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, 278642AU7 can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in 278642AU7 will offset losses from the drop in 278642AU7's long position.

The idea behind Pfizer Inc and EBAY INC 36 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.